Guidance on healthcare reform, with more guidance in the forecast

Thanksgiving week was busy on the healthcare-reform front. The Department of Health and Human Services (HHS) released its proposed final rule on Standards Related to Essential Health Benefits (EHB), Actuarial Value (AV), and Accreditation. While there are still questions outstanding, this proposed final rule answered several dental-related questions raised in past blogs.

One of the basic issues with the pediatric oral EHB is the definition of “pediatric.” HHS is proposing that “pediatric” be defined as under age 19, with flexibility for states to extend pediatric coverage beyond this limit.

This is reasonable; while the clinical definition of pediatric is closer to age 13, under age 19 is consistent with social programs, including CHIP.

The proposed rule also clarifies coordination of benefits between medical and standalone dental plans. The 10 EHBs are subject to an out-of-pocket limit, but coordinating this between medical and standalone dental carriers would be complicated and expensive. As a result, standalone pediatric oral dental will have a separate limit from the medical plan. This eliminates the complexity of coordinating these limits and makes it much easier for the consumer to understand. The rule was not clear on what the separate limit will be, but the rule specifies it must be “reasonable” and is requesting comments.

The exact mix of dental benefits included in the EHB is critical. Wisconsin has defaulted to the FEDVIP plan to outline the pediatric oral-health EHB, but this decision won’t be final until the end of the 30-day comment period, or Dec. 26, 2012. Wisconsin could still go with the state’s CHIP plan — a plan we prefer as a benchmark because it’s designed specifically for children. Either way, the benchmark will be finalized by the end of December and we will be ready.

A key clarification in the released rule was that cosmetic orthodontia will not be part of the EHB. Going forward, orthodontia will remain a choice and not a requirement — great for consumers, since cosmetic orthodontia adds significant cost.

The benchmark plan defines only the specific procedures covered, not the coverage level for these procedures (except that preventive must be covered at 100%). The coverage level is defined through the AV. The proposed final rule outlines how AV will be applied to standalone dental plans satisfying the pediatric-oral-EHB requirement.

Standalone dental plans will calculate AV independently of the other EHBs and will be subject to different AV requirements. Under the standalone dental EHB, a high plan will have an AV of 85% and a low plan an AV of 75%.

Similar to the medical AV calculation, the dental AV calculation has an allowed variance of +/- 2%. Unfortunately, unlike medical, there will not be a standard calculator, so challenges remain. Plans with the same benefit design could have different AV, or plans with different benefit designs could have the same AV, making AV an inexact comparison measure for dental plans. Additionally, if the pediatric oral EHB is embedded in the medical plan, it does not appear the dental AV will be calculated separately, making it very difficult to compare the dental EHB benefit embedded in a medical plan to the EHB offered through a standalone dental plan.

There is a lot of work to do over the next several months to get ready for HCR, but clarification on these core issues goes a long way in keeping the process moving. You can count on us to stay engaged and informed on dental issues, and we will continue to be your go-to HCR resource for dental.